£22bn black hole

[keeperofdarktails]

I've just heard Rachel Reeves talk about how the previous govt has left a £22 billion black hole in the economy.

I'd have thought that after over a decade of austerity we should be in a (theoretically) better place in the economy so why is there a black hole? I know cost of living has increased and prices etc, but they've had years of cutting public spend budgets too so I just wonder where has the money gone..? I wish the bbc reporter would have asked her this, reporting was so obviously biased.

It's not enough.

Brown/Blair "saved the NHS" twice by increasing NIC by 1% on two occasions.

It didn't work! The NHS burned through the money and committed itself to years of ruinously expensive PFI deals that our children will be paying for years to come.

It'd be 1% this year. Money spent. Another 1% needed next year. Money spent. Still no real improvement. So another 1% the year after, and so it goes on.

I'd be more impressed if RR and KS committed to dealing with the Black Economy which is the largest component of the official tax gap amounting to something like £40 billion per year!

That's people doing "cash in hand" jobs undeclared, small businesses not registering for and charging VAT, traders doing "cash in hand" jobs so as not to charge VAT (and not pay tax and NIC on their profits), firms employing people "under the counter" so avoiding tax and NIC and the staff fraudulently claiming benefits whilst not declaring their earnings, people selling duty free booze and fags, money laundering via hand car washes, Turkish barbers, nail bars, ethnic supermarkets, etc! And that's before drug dealing and prostitution both of which are effectively tax free due to lack of policing/control! It's absolute rife and causing a massive hole in the nation's finances.

Yet, neither the Govt nor HMRC take it seriously. They used to do spot checks, enquiries, investigation, "book" checking visits, etc., but that all stopped with the amalgamation of the different tax agencies and then the centralisation of tax offices and closure of local offices with huge numbers of experienced tax inspectors made redundant to be replaced by minimum wage call centre workers who've not got a clue!

Sorry, but I’m calling you out on your post.

You do not have a senior role in Govt.

Lets be honest please.

Everyone will blame the financial situation on the things they didn't agree with. It means very little. Much of Europe is in similar position.

Well that will require reversing the cuts to HMRC over the last few years, introducing an ID card system, in other words a lot of spending first.

But i do agree it needs to happen.

I don't agree on the NHS, we spend per capita less than pretty much any EU country but we also waste what we do spend, even my NHS management accountant friend cannot explain why a company with billions of turn over, based in the USA, is running community health services in our trust, using former NHS staff but badged up as NHS.

They then duplicate all the back office functions plus of course charge the NHS to pay for this and make a profit.

Why?

I don’t believe them tbh. It’s so that people will still blame the tories for the things they will be doing in the budget. Every single government says there is no money after taking over.

True but the difference now is we can no longer tax or spend our way out of the current mess.
98% can't afford anymore tax and we already borrow 100% of GDP.

Hence Lab going on about "Growth"

But you don't get growth by increasing tax on working, investment, businesses and the rich who pay a high proportion of tax anyway.

They may or may not do these things - it remains to be seen.

@iwishihadknownmore

Well that will require reversing the cuts to HMRC over the last few years, introducing an ID card system, in other words a lot of spending first.

It's not just the "last few years". The UK tax authorities have been a shambles for 25-30 years. Ever since they merged the different departments (in the name of efficiency) which they promised would increase revenue and reduce evasion/fraud etc. It didn't work.

Customs and Excise and Inland Revenue merged in 2005!

We're going back to Brown/Blair's days as most "damage" to the UK's tax collection/administration systems were done in their days.

Andrew Landsley.

More than half of Britons disapprove of Labour government, poll finds
New surveys show surge in negative view of new administration and many more expecting rise in their taxes
FT

Link?

paywall.

doubt you have a subscription some how.

I might. Where is it?

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https://www.ft.com/content/9efc94f3-bf38-45bd-a598-155e95168a5aa_

Some 65 per cent of those surveyed by Ipsos said Britain’s economic problems were worse than the Conservatives admitted when they were in power, and 56 per cent said they believed that the circumstances Labour inherited were the worst since the second world war.

Just did. It’s the FT. The lazy person is the one not supplying a link. Given how easy it is, that’s the height of idleness.

It says FT at the bottom of my post.

Give me strength.

Saying FT isn’t a link.

Every new government always says they have bee left a black hole by the previous lot. Par for the course.🙄

I don’t remember the new government saying it in 1997 and this time it’s demonstrably true. Not only a black hole but a country on its knees. No government in my lifetime has inherited such a poison chalice.

A bloated welfare state, a tax burden at post war highs, a government in debt to the unions, a cabinet with little real-world commercial experience.

Trust me, the best is yet to come.

I don't doubt that, i detest tax evasion and the avoidance only the wealthy can access.

However, what Blair did is irrelevant, the Tories have been back in power for the last 14 years and just carried on the run down of public services, inc HMRC, they also scrapped any chance we had of an ID system.

I used to date a tax accountant, the powers HMRC have are vast but without staff and without knowing who is who, clamping down on tax evasion within the general public cannot happen.

@iwishihadknownmore

without staff and without knowing who is who, clamping down on tax evasion within the general public cannot happen.

Trouble is they're not even clamping down on "reputable" businesses where they know the owners/directors, where they're trading from fixed premises, etc.

Fair enough for "transient" people with no fixed business address, nor formally registered anywhere, etc., i.e. transit van men with only a mobile number, or car boot traders, etc.

I'm an accountant. I'm required to submit "suspicious activity reports" when I have grounds to suspect financial crimes such as money laundering and tax evasion, even by my own clients. Over the 20 or so years since the legislation has been in place, I've made maybe a couple of dozen such reports about current or potential clients, as the law requires me to do. Not a single one has resulted in any action being taken, not even a letter from HMRC asking for details, let alone any kind of inspection or investigation or enquiry. Lots of other accountants report the same, to the extent that many are questioning why they bother at all. The ones I reported were all established people with established businesses that were easy to trace and were submitting accounts and returns every year, just not disclosing all income or over-claiming expenses, or not registering for VAT when they should do, not putting staff through the PAYE scheme, etc etc. All really easy "on a plate" jobs for HMRC to tackle.

Yet at the same time, we get ridiculously stupid letters from HMRC asking the daftest of questions, questioning figures in the accounts that are trivial, and generally making a nuisance of themselves where there's bugger all tax at stake. One memorable letter was a list of bank transactions that they wanted explanations for from the business bank account, including a couple that were under a tenner and one was less than 50p - just what the hell is the point. Another classic was where the directors loan account was overdrawn, clearly overdrawn as per the accounts, there should have been a tax charge on it, but the HMRC clown completely missed it from their review of the accounts - clearly hadn't a clue, so client got away with that.

One of the reports I made was a potential client who basically claimed all household costs as genuine business expenses, including a family McD's meal every weekend, clothing from Next and M&S, weekly supermarket food shop at Tesco, home Sky TV - it was crazy - tens of thousands of pounds meaning underpaid tax of thousands of pounds per year!

HMRC have staff but they're not experienced nor competent enough to know what to look for anymore. Far too many made redundant over the past 20-25 years and the young ones coming through havn't a clue - they're mostly just unqualified call centre workers.

100% i'm shocked at how HMRC operate or rather don't.

My point is that both main parties are complicit in this, Labour for stupid reforms, Tories for continuing them/not reversing them.

No wonder the reported tax gap is around £40 billion.